Cement Industry: Unbalanced Growth

As of February 14, 2012, a total of 14 listed companies in the cement industry disclosed their 2011 performance, of which 11 listed companies disclosed their 2011 experience in January 2012, and three listed companies advanced in the 2011 third quarterly report. Estimated annual results. Nine out of 14 listed companies achieved high growth of more than 80% in 2011, of which Fujian Cement (600802) had an increase of more than 1313%, and Chaodong (600318) and Sichuan Shuangma (000935) saw increases in performance. More than 300%; Huaxin Cement (600801) and Asia Pacific Group achieved steady growth of 50% in 2011; Xishui Co. (600291) recorded a 50% year-on-year decrease in 2011, and ST Qinling (600217) still achieved profitability. Due to the relocation of the company's cement production line, ST Lionhead (600539) was forced to lose money in 2011.

Conclusion: In 2012, cement needs to be started in the downstream market. The price of cement may have a low or high trend before and after the cement price increases. Under the circumstance that the monetary policy remains stable and the scale of credit extension is not significant, the growth rate of fixed asset investment will face a slowdown in 2012. This year, the focus of fixed asset investment will be mainly on national key construction projects and construction of affordable housing. In addition, overcapacity in the cement industry is an indisputable fact. It is expected that the new clinker production capacity will reach about 200 million tons in 2012. In 2012, imbalances in the supply and demand side of the cement industry may be magnified, and pressures on the southwest and northwest regions to absorb new production capacity may be even greater. Since the second half of 2011, the cement price has gradually decreased, and cement prices have also declined in January 2012. It is expected that the cement price will increase steadily after the start of fixed asset investment projects in March.

In light of the above analysis, we believe that the cement sector can focus on listed companies with regional advantages and regional synergies, such as Tower Group (002233), Jiangxi Cement (000789), Fujian Cement, Huaxin Cement, Conch Cement (600585), and the same cement. (000885), Tianshan shares (000877).